Antam's sales fall on lower nickel output

Antam's sales fall on lower nickel output

Bloomberg, Jakarta

PT Aneka Tambang (Antam), a mining company 65 percent-owned by
the government, said second-quarter sales fell 2 percent as a
smelter breakdown cut nickel output.

Sales fell to Rp 714.62 billion (US$72.8 million) in the three
months ended June 30, the company said in an e-mailed statement.
Sales of ferronickel and nickel ore contributed 72 percent of
revenue.

Production of ferronickel, a mixture of iron and nickel used
to make stainless steel, fell 40 percent to 1,404 metric tons
because of the shutdown. The smelter will restart in September,
said the company.

"To offset the loss of production, Antam will increase its
volume of toll smelting" with a third-party contractor, the
statement said. "To offset lost revenues, Antam will boost high-
grade nickel ore sales."

Higher nickel prices helped Antam offset the drop in
production. Sales of the metal fetched $7.27 per pound on average
in the quarter, 17 percent more than in the year-earlier quarter,
the company said.

The firm also mines gold, which accounted for 23 percent of
second-quarter sales, and bauxite.

Antam said it would spend about $5 million to repair its FeNi
II smelter before it restarts in September to address safety
concerns raised by abnormal metal levels and heat.

Construction of another smelter, FeNi III, is on schedule and
the plant will start commercial production in the first quarter
of 2006, the company said.

Antam produced 749,893 metric tons of nickel ore in the second
quarter, 28 percent less than in the same period last year. It
raised output of gold by 24 percent to 1,033 kilograms, silver
production by 43 percent to 8,046 kilograms and output of bauxite
by 6 percent to 358,914 tons.

The company had said on May 31 that it was considering bidding
for 18.7 percent of the world's second-largest copper mine run by
Freeport-McMoran Copper & Gold Inc., comprising 9.36 percent of
the mine owned by PT Indocopper Investama and a 9.36 percent
stake held by the government.

"Antam has decided to prioritize the acquisition of the
government's stake in PT Freeport Indonesia, rather than the
stake held by PT Indocopper Investama," Monday's statement said.
"The acquisition of the government's stake appears more feasible
than acquiring both stakes and is a unique opportunity for
Antam."

Shares in Aneka Tambang were unchanged at Rp 2,425, 41 percent
higher since the year started.